THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
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Monday, March 24, 2014

China Manufacturing Slowing…US Manufacturing Slows too

CHINA MANUFACTURING IN CONTRACTION (Bloomberg)

“China’s manufacturing industry weakened
for a fifth straight month, according to a preliminary measure for March
released today, deepening concern the nation will miss its 7.5 percent growth target this year. The Purchasing
Managers’ Index from HSBC Holdings Plc and Markit Economics dropped to 48.1…”Story at…

http://www.bloomberg.com/news/2014-03-24/china-manufacturing-gauge-unexpectedly-falls-as-slowdown-deepens.htmlWhat?Did they
have bad weather too?OK, bad joke. The
mention of China’s GDP growth missing its 7.5% target is the joke, because the
7.5% number is mostly made up.For
example, part of their GDP growth is based on a huge building program that has
increased housing in the cities.Now
those real estate complexes stand vacant. In a State-run economy, can constructing
buildings that do not satisfy an actual need be considered a positive for GDP?I say no.It is similar to the over building in the rest of the world from 2004
until the 2007/8 crash.The rest of the
world paid dearly.China’s problems may
be a continuation of those problems as well as an indicator that word demand is
slowing.

US FACTORY ACTIVITY SLOWS TOO,
BUT STILL EXPANDING (Reuters)

“U.S. manufacturing activity slowed in March after
nearing a four-year high last month, but the rate of growth and the pace of
hiring remained strong, an industry report showed on Monday. Financial data
firm Markit said its "flash" or preliminary U.S. Manufacturing
Purchasing Managers Index slipped to 55.5 from 57.1 in February. Readings above
50 indicate expansion.”Story at…http://www.reuters.com/article/2014/03/24/us-usa-economy-markit-idUSBREA2N0S420140324The Chicago Fed reported
that national economic activity increased in February, but it’s the above slowing in
March reported by the private firm Markit in the preliminary PMI that is
concerning.There should be pent up
demand as a result of bad weather in January and February.March should be accelerating. MARKET REPORT

Monday, the S&P 500 was down about 0.5% to 1857 (rounded).

VIX rose about 0.6% to 15.09.

The yield on the 10-year Treasury Note was down slightly
to 2.73%.

MARKET INTERNALS (NYSE DATA)

Breadth continues to show lower lows and mostly lower
highs.The 10-day moving average of
stocks advancing on the NYSE remained 50% at the close.(A number below 50% for the 10-day average is
generally bad news for the market.)New-highs outpaced new-lows Monday.The spread (new-highs minus new-lows was +44.(It was +165 Friday). The 10-day moving
average of change in the spread was minus-2. In other words, over the last 10-days, on
average, the spread has decreased by 2 each day. The smoothed 10-dMA of
up-volume was up today, partly because of the high-volume day Friday.The internals are neutral on the market, but
new-hi/new-lo data may be turning upward so the internals might switch to
positive soon. If they do, I will return to a stock allocation of 50%.

Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late.They are most useful when they diverge from
the Index.In 2013, using these
internals alone would have made a 16% return vs. 30% for the S&P 500 (in on
Positive out on Negative – no shorting).Of course, few trend-following systems will do well in an extreme low-volatility,
straight-up year like 2013.

NTSM

The NTSM analytical model remained HOLD today.The Price indicator is positive, because up
moves have been bigger than down moves recently. VIX turned positive today, too,
since VIX has been dropping.Sentiment
is negative, but just barely. The Volume indicator is neutral.

MY INVESTED POSITION

I reduced to 30% invested in stocks because of the NTSM
sell signal on 13 March.This is a
conservative stock allocation commensurate with the NTSM Sell signal.Leaving 30% invested hedges the bet in case
NTSM is wrong – no system is perfect.I
will return to 50%-stock allocation if the Market Internals of the NTSM
indicators turn positive.Internals
could still turn positive soon; we’ll see.

Followers

About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.